GADSDEN COUNTY DISTRICT SCHOOL BOARD

Report No. 2017-147 March 2017

GADSDEN COUNTY DISTRICT SCHOOL BOARD

Sherrill F. Norman, CPA Auditor General

Operational Audit

Board Members and Superintendent

During the 2015-16 fiscal year, Reginald C. James served as Superintendent of the Gadsden County Schools and the following individuals served as School Board Members:

Audrey D. Lewis to 4-30-16,a Chair to 11-16-15 Steve Scott Isaac Simmons, Jr., Vice Chair Charlie D. Frost Roger P. Milton, Chair from 11-17-15

District No. 1 2 3 4 5

a Board member resigned and position remained vacant through 6-30-16.

The team leader was Nicole W. Ostrowski, CPA, and the audit was supervised by Shelly G. Curti, CPA.

Please address inquiries regarding this report to Micah E. Rodgers, CPA, Audit Supervisor, by e-mail at micahrodgers@aud.state.fl.us or by telephone at (850) 412-2905.

This report and other reports prepared by the Auditor General are available at: audgen

Printed copies of our reports may be requested by contacting us at: State of Florida Auditor General

Claude Pepper Building, Suite G74 111 West Madison Street Tallahassee, FL 32399-1450 (850) 412-2722

GADSDEN COUNTY DISTRICT SCHOOL BOARD

SUMMARY

This operational audit of the Gadsden County School District (District) focused on selected District processes and administrative activities and included a follow-up on the operational audit findings noted in our report No. 2016-156. Our audit disclosed the following:

Finding 1: District records did not always evidence that ad valorem tax levy proceeds were used only for authorized purposes, resulting in questioned costs of $272,466.

Finding 2: The Board did not adopt salary schedules that provided annual salary adjustments for instructional personnel and school administrators based on employee and student performance.

Finding 3: Required background screenings were not always performed for applicable contractor workers and District instructional and noninstructional employees.

Finding 4: The District did not always comply with State law by limiting the Florida Best and Brightest Scholarship Program awards to classroom teachers based on Program-required college entrance exam scores and timely, highly effective teacher evaluations.

Finding 5: The virtual instruction program (VIP) provider contracts did not always include statutorily required or necessary provisions.

Finding 6: District records did not always evidence that VIP provider employees and contracted personnel were subject to required background screenings.

Finding 7: Certain information technology (IT) security controls related to user authentication need improvement to ensure the continued confidentiality, integrity, and availability of District data and IT resources.

BACKGROUND

The Gadsden County School District (District) is part of the State system of public education under the general direction of the Florida Department of Education, and is governed by State law and State Board of Education rules. Geographic boundaries of the District correspond with those of Gadsden County. The governing body of the District is the Gadsden County District School Board (Board), which is composed of five elected members. The elected Superintendent of Schools is the executive officer of the Board. During the 2015-16 fiscal year, the District operated 14 elementary, middle, high, and specialized schools; sponsored 2 charter schools; and reported 5,449 unweighted full-time equivalent students.

This operational audit of the District focused on selected processes and administrative activities and included a follow-up on the operational audit findings noted in our report No. 2016-156. The results of our audit of the District's financial statements and Federal awards for the fiscal year ended June 30, 2016, are presented in a separate report.

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FINDINGS AND RECOMMENDATIONS

Finding 1: Ad Valorem Taxation

State law1 allows the District to levy ad valorem taxes for capital outlay purposes within specified millage rates subject to certain precedent conditions. Among the specific conditions imposed by State law2 are requirements to advertise, in advance of the adoption of a budget authorizing the expenditure of such tax levy proceeds, the purposes for which the Board intends to spend the proceeds of each tax levy and to specify in the required notice of tax levy the projects to be funded by the assessment of such taxes.

Allowable uses of ad valorem tax levy proceeds include, among other things, funding new construction and remodeling projects; maintenance, renovation, and repair of existing schools; payments under lease-purchase agreements; payments of certain loans; and property and casualty insurance premiums to insure educational and ancillary plants subject to certain conditions and limitations. The District accounts for the ad valorem tax levy proceeds in the Capital Projects ? Local Capital Improvement (LCI) Fund.

For the 2015-16 fiscal year, the District's LCI Fund expenditures totaled $876,447 and transfers to other funds totaled $1.9 million. We examined District records supporting selected LCI Fund expenditures and transfers totaling $460,104 and $1.5 million, respectively, to determine their propriety. We found that, based on the records examined, the selected LCI Fund expenditures complied with State law; however, we noted that the District transferred LCI Fund proceeds:

Totaling $201,366 to the Debt Service Fund to provide resources for a District sales tax revenue bond payment; however, State law does not authorize use of these proceeds for such payments. In response to our inquiries, District personnel provided the published advertisement that identified the sales tax debt service payment as a purpose for using the proceeds and, as such, believed the transfer was authorized. Notwithstanding this response, neither State law nor other legal authority allows use of ad valorem tax levy proceeds to pay for sales tax revenue bonds.

Totaling $400,099 to the General Fund to provide resources for certain insurance premiums, such as property and casualty insurance to insure educational and ancillary plants; however, $71,100 of that amount was for general liability insurance premiums, which is not an allowable use of ad valorem tax levy proceeds.

In response to our inquiry, District personnel provided us with the insurance agreement supporting the $400,099 premium payment and indicated that the general liability insurance coverage included property damage. Notwithstanding this response, the District's insurance consultant indicated that the general liability insurance is for property damage caused by the District to someone else's property, not to District-owned property. Consequently, the $71,100 transfer represents questioned costs of ad valorem tax levy proceeds.

Accordingly, transferred amounts totaling $272,466 represent questioned costs of ad valorem tax levy proceeds. Without adequate controls to ensure that ad valorem tax levy proceeds are expended for authorized purposes, the risk is increased that the District will violate the expenditure restrictions governing the use of the proceeds.

1 Section 1011.71(2), Florida Statutes. 2 Section 200.065(10)(a), Florida Statutes.

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Report No. 2017-147 March 2017

Recommendation: The District should enhance controls to ensure that ad valorem tax levy proceeds are used only for authorized purposes. In addition, the District should provide documentation to the Florida Department of Education supporting the allowability of the costs totaling $272,466 or restore this amount to the LCI Fund.

Finding 2: Performance Salary Schedule

State law3 requires the Board to adopt salary schedules that provide annual salary adjustments for instructional personnel and school administrators based on performance. If budget constraints in any given year limit the Board's ability to fully fund all adopted salary schedules, the performance salary schedules are not to be reduced on the basis of total cost or the value of individual awards in a manner that is proportionally greater than reductions to any other salary schedules adopted by the District. State law4 also provides that a performance evaluation must be conducted for each employee at least once a year, and specifies certain evaluation criteria and percentage weightings, including basing at least one-third of the evaluation on student performance.

Our review of the performance evaluations and Board-adopted salary schedules for the 2015-16 fiscal year disclosed that, although the performance evaluations included the required evaluation criteria and percentage weightings, the Board's salary schedules for instructional personnel and school administrators were not based on employee or student performance. Instead, consistent with the 2014-15 salary schedules and pay rates, on June 23, 2015, the Board approved a salary schedule for use regardless of the employees' hire date and without consideration of employee or student performance.

In response to our inquiries, District management indicated that the Board did not adopt a performance salary schedule for the 2015-16 fiscal year due to budget constraints. Notwithstanding this response, we are unaware of any exemption from the statutory requirement to adopt salary schedules that provide annual salary adjustments for instructional personnel and school administrators based on employee and student performance.

Recommendation: The Board should adopt performance salary schedules that provide annual salary adjustments for instructional personnel and school administrators based on employee and student performance in accordance with State law.

Finding 3: Background Screenings

State law5 requires that each person hired or contracted to serve in an instructional or noninstructional capacity who are permitted access on school grounds when students are present or who have direct contact with students must undergo a level 2 background screening6 at least once every 5 years. State law7 also provides that noninstructional contractors may be exempt from the background screening

3 Section 1012.22(1), Florida Statutes. 4 Section 1012.34, Florida Statutes. 5 Sections 1012.32, 1012.56(10), 1012.465, and 1012.467, Florida Statutes. 6 A level 2 background screening includes fingerprinting for Statewide criminal history records checks through the FDLE and national criminal history records checks through the Federal Bureau of Investigation. 7 Section 1012.468, Florida Statutes.

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requirements if the contractors are under the direct supervision of a school district employee or contractor

who has had a criminal history check and meets the State law screening requirements. Additionally, for

noninstructional contractors, State law8 requires that the District verify the results of the contractor's

background screening using the shared system implemented by the Florida Department of Law

Enforcement (FDLE).

To promote compliance with the statutory background screening requirements, District procedures

require the Human Resources Department to ensure contractor workers and employees who have

access to school grounds undergo required background screenings every 5 years. The District issues

badges for contractor workers and employees to wear and the contractor workers' badges identify the

workers' screening dates. To help monitor and ensure that required background screenings are

performed at least once every 5 years for previously screened contractor workers, the District relies on

notifications received from the FDLE database system when the screenings near expiration. For new

contractor workers, District personnel indicated that they rely on the District departments that will receive

the contractor services to send the workers to the Human Resources (HR) Department for background

screenings before the services are performed. Additionally, to ensure employees are timely rescreened,

the District monitors background screening information stored on the FDLE database on a quarterly

basis.

For the 2015-16 fiscal year, we evaluated District records and background screening procedures for

District contractor workers and instructional and noninstructional employees and noted that:

The District had 97 contractor workers who were permitted access on school grounds when students were present or had direct contract with students. We examined District records for 55 selected contractor workers to determine whether the required background screenings were performed and found that background screenings had not been performed for 29 workers who were not exempt from the background screening requirements. The 29 workers included 19 employed by a security services contractor; 9 who provided student services for various programs, such as the 21st Century Community Learning Centers, Special Education, and Head Start Programs; and a school crossing guard.

In response to our inquiries, District personnel indicated that they relied on the security services contractor to ensure that the required background screenings were performed for the 19 security workers as specified in the contract, and that the required background screenings were not performed for the other 10 contractor workers because the District departments that received the services overlooked sending the workers to the HR Department to be screened. Subsequent to our inquiries, the District obtained the background screenings during the months of August through December 2016 for the 19 contractor workers still employed by the District and noted no inappropriate backgrounds.

The District employed 479 instructional and 475 noninstructional personnel. To determine whether required background screenings had been performed for these employees, we requested for examination District records, as of August 2016, for 62 selected employees and found that, for 2 instructional employees and 2 noninstructional employees, the required level 2 background screening had not been performed at least once in the past 5 years.

In response to our inquiries, District personnel indicated that background screenings were not performed for these 4 employees due to oversights. Subsequent to our inquiry, District personnel indicated that the background screenings for the instructional employee and noninstructional

8 Sections 1012.467(2)(f) and 1012.467(7)(a), Florida Statutes. Page 4

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